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Infographic: British family businesses

By Michael Finnigan

Being home to one of the world's most global cities is a mixed blessing for the UK, but family businesses play a significant role in keeping regional economies ticking

Britain needs to establish its own Mittelstand. So argued the country's leading business organisation, the Confederation of British Industry (CBI), in the lead up to May's general elections. The country's medium-sized enterprises, often family owned, generate a quarter of private sector GDP, despite making up just 2% of British companies, the organisation pointed out. 

“It's handy to use the German shorthand, because the Mittlestand is so lionised in the UK,” argues Lucy Armstrong, former chair of the CBI's SME council. Armstrong says politicians and the general public need to be aware of family businesses' significant contribution to communities – and tax revenues.

The largest British family business is Wittington Investments, the investment vehicle of the Weston family, who through it controls Associated British Foods, which is the parent company of low-cost retailer Primark, as well as high-end department stores, including Fortnum & Mason and Selfridges.

“The mainstream businesses that people think of as family businesses would be post-industrial businesses. If they're still around, it's their values, and their ability to flex and adapt that have contributed to their continued success,” says Armstrong, chief executive of business consultancy The Alchemists.

She adds that rural businesses – farms and large estates –have featured strongly in UK's economic history, and are still important today. Grosvenor Group, for example, dates back to 1677, and is today headed by the Duke of Westminster – one of the UK's wealthiest individuals. Similarly Cadogan Estates has a property portfolio worth £5.2 billion ($7.9 billion).

Despite being home to London, one of the world's most global cities, British family businesses are more domestically focused than their global counterparts, with exports accounting for just 16% of their revenues, compared to 25% internationally, according to the PwC Family Business Survey 2014. “London is not a British city, London is a global city,” argues Armstrong. “The rest of the UK is completely different.” 

As such, family businesses play an important role in the country's regional economies, Armstrong says. “You do see family businesses acting as beacons and catalysts in their local economy.” Privately-owned Shepherd Building Group has long played an important role in the community in York, while Clarks, the shoe company founded in 1825, is central to the economy in the small Somerset town of Street. 

“We need to move to a public discourse that recognises business isn't some horrible corporate,” Armstrong concludes, a perception perpetuated by reality TV shows like The Apprentice and Dragon's Den. “That actually there's a very responsible and respectable group of businesses out there, many of whom are family businesses.”

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